It changes over time, depending on the expected rate of return on productive assets

exchanged among market participants and people's time preferences for consumption.

This is the rate on a Treasury bill or a Treasury bond.

Over the past several years, Germany, Japan, and Switzerland have had lower interest

rates than the United States due to lower values of this premium.

As interest rates rise, bond prices fall, and as interest rates fall, bond prices rise. Because

interest rate changes are uncertain, this premium is added as a compensation for this

uncertainty.

It is based on the bond's rating; the higher the rating, the lower the premium added, thus

lowering the interest rate.

This premium is added when a security lacks marketability, because it cannot be bought

and sold quickly without losing value.